Concerned about the cost of remortgaging? Find out about stamp duty, arrangement fees and all the other charges you'll need to pay in our in-depth guide.
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Author: Pete Mugleston - Mortgage Expert, MD
Updated: February 16, 2022
If you want to look for a new mortgage deal when your current contract comes to an end after two, three or five years, switching to a new deal will involve remortgaging.
Here we outline what remortgaging costs you will need to consider and how best to go through the process without incurring unnecessary fees.
Read more on remortgaging fees in detail:
The following topics are covered below...
What types of fees to expect when remortgaging
The extra costs involved when remortgaging cover the administration and legal work that comes with switching your deal, either with your current lender or a new one.
Costs vary from person to person, depending on how much you want to borrow, the deal you want to switch to and for how long. For some homeowners, fees may be just a few hundred pounds, but for others, costs could be much higher.
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How a broker can help you avoid unnecessary fees
When remortgaging you might be simply aiming to switch to another deal to take over when your current one expires. There may be more complex reasons however, such as wanting to borrow more for home improvements or a growing family, you could be looking to consolidate debts or change whose name is on the mortgage.
If you’re considering getting professional advice, it’s worth noting that an experienced broker understands the complexities of the market and how to avoid unnecessary costs when remortgaging. They also know exactly where to look for the best deals and what the intricacies of each mortgage offer mean.
For example, will lowering those initial remortgaging fees result in higher interest payments over time?
Do you pay stamp duty?
Stamp Duty Land Tax (SDLT) must only be paid if you want to change the legal title of your home during the remortgage.
Let’s look at some scenarios of when you do and do not need to pay stamp duty:
|You must pay stamp duty||Exempt from paying stamp duty|
|When adding a person to the mortgage to own a share of the property, such as moving in with a partner.||If the property is divided equally between the homeowners.|
|When transferring land or property to or from a company.||When transferring land or property after a divorce or legal separation following a court order or agreement.|
|When taking a larger share of a jointly owned property.||When the legal title transfer is a gift.|
If stamp duty is payment, you can use our calculator below to work out how much it will cost you.
Stamp Duty Calculator
This calculator can tell you how much Stamp Duty Land Tax you will need to pay on your property purchase, whether you're a first-time buyer, a home-mover or in the market for an investment property.
Your stamp duty to pay is:
Your effective tax rate is
Now that you've worked out how much stamp duty is payable, it's a good idea to talk to a broker about your mortgage options. They can help you make sure you aren't paying over the odds with all costs and fees factored in.
The legal fees are charged to manage the transfer of your mortgage and adding the new lender onto the property’s title deeds. They include conveyancing fees and also the disbursements, i.e. what third parties charge for services such as the property searches.
If you remain with your current lender and go for a ‘product transfer’ (a remortgage to a new deal or rate with them), or you want an advance on your current mortgage (borrowing more from your current lender), you won’t need to pay any legal fees.
The conveyancing fees are the solicitor’s fees and are usually about £300. However, most lenders provide this service free of charge.
Be aware that this does mean you will probably have no choice in your legal representation and the standard of service you receive could be compromised.
The free packages also won’t cover any additional requirements above a basic remortgage, so any extras, such as name changes on the title deeds, will involve paying a solicitor for.
A reliable broker can help you to look out for hidden costs within ‘free services’ too, as there may be higher costs elsewhere to make up for the shortfall.
Conveyancing fees are to cover the following…
- Identity checks
- Gathering your current mortgage details
- Gaining a redemption statement
- Researching leasehold requirements
- Necessary property checks
- Legal admin such as valuations, land registry searches, small print, signatures and final checks
- Completion (transfer of funds)
- Land Registry changes (updating property’s legal title)
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Do you pay capital gains tax?
You do not need to pay capital gains tax (CGT) when remortgaging your home. CGT is only payable upon the sale of a second/investment property, not your main residence.
Is it wise to remortgage if the fees you’re quoted are high?
It’s wise to bear in mind that, while remortgaging fees should be taken into consideration, they are less important as the overall cost of the mortgage and the interest rates you will accrue.
While the numbers might seem costly, there are ways to ensure you get a good deal that brings down the monthly repayments of your mortgage. A good broker will be able to scan the market for you and ensure the effort of remortgaging is worth it.
The alternative is switching to your current lenders’ standard variable rate mortgage, which will almost always leave you out of pocket compared to a new lender’s tracker or fixed-rate mortgages.
Let’s look in more detail at other fees you might need to pay during a remortgage process:
Fees for leaving your current mortgage deal
Other costs to consider are exit fees and repayment charges, and they include the following…
Early repayment charge
This is a penalty fee that’s incurred if you break an existing deal early. It’s a way for lenders to recoup lost future interest from the agreement and usually applies to fixed-term mortgages.
It usually costs between 1-5% on your remaining mortgage balance.
While it’s probably best to wait until your current mortgage period comes to an end, there are times when the fee could still be worth paying if the deal you’re switching to is good and the sums add up. Some new lenders also cover this fee.
Deeds release fee
This is an admin fee that’s paid to your current lender for sending your property’s title deeds to your solicitor. It’s interest-free and you can usually pay it up front or at the end of your mortgage term.
Not all lenders charge for it, but those that do usually charge between £50-£300. If you’re working with a broker, they will be vigilant about this fee as some lenders have been known to increase the original sum that was agreed with you without warning.
This is a fee for leaving your current mortgage deal or paying your mortgage in full, regardless of when you do it. It is usually a relatively small sum – between £50-£65 – and not all lenders charge for it.
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Fees for securing a new mortgage deal
They are as follows…
Also known as application fee, this is the fee lenders charge to set up a new mortgage. It usually costs at least £1,000 and you can typically pay it up front or as part of your mortgage, however you will be charged interest on this for the mortgage term.
This is where the expertise of a broker comes in when remortgaging, as sometimes hefty fees like this can be used to offset low interest rates, disguising as the best deal for you.
A professional broker can also help you to grasp the complexities of how to pay it.
Here’s why: if you pay up front for this fee and your purchase falls through, you could lose the money you’ve paid. If you don’t want to add it to your mortgage, there is a way to ‘overpay’ this sum after the mortgage completes.
This is the cost of valuing your property for the lenders’ security before they agree to offer you a mortgage so they have confirmation of its worth.
While this fee tends to be included in many remortgage deals, if not it must be paid when you apply for your mortgage.
It could cost anywhere between £250-£1,500, so it is always worth looking at the small print of any mortgage deals for hidden costs.
While this fee is not overly common these days, it is worth checking to see if it’s in any potential new deal. It is a fee to secure a rate when remortgaging, such as a discount, fixed-rate or tracker. It should cost between £100-£200 and is expected to be paid when submitting the application.
While initially appearing as a cost, working with a broker on your remortgage could save you money in the long run.
The brokers we work with have access to the best remortgage deals that average customers don’t, they understand how the process works and what intricacies to look out for, and will only charge a fee after a mortgage application has been successfully completed.
Get matched with a reliable remortgage broker
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Our approach of specialising in introducing the right broker with the right customers means you will get the best possible deal in safe, professional hands.
Get in touch by calling 0808 189 0463 or make an enquiry online to find out how to get help today.
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Yes. Paying fees on a buy-to-let remortgage work in the same way and you should approach them with the same considerations: that low rates might not equal the best deal, and lower fees might not either.
Depending on the value of your home, you will be charged a Land Registry fee to register
your new mortgage on the property. This can be anywhere between £20 and £910.
Some of them are. If you’re a landlord, remortgage costs such as arrangement fees and legal fees are tax-deductible from your rental profits.
If you don’t recoup these costs in your rental accounts, they cannot be reclaimed against any future capital gain (only the legal fees to initially purchase the property are classed as acceptable capital costs).
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Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!